Comment by rramadass

Key Points:

The government has yet to decide the rate or exactly where it will apply, but proposals under discussion include a merchant discount rate (MDR) of 0.3-0.5% - a small fee paid by a business to the banks and payment companies that process its UPI payments - on larger transactions at big businesses.

The government says consumers and person-to-person UPI payments will remain free. If merchant fees are introduced, they will apply only to some transactions above a set threshold, at a nominal rate, meaning most UPI payments will remain free.

One option reportedly under discussion would target transactions above 2,000 rupees at larger merchants, leaving small businesses and low-value payments untouched. Transactions above that threshold account for only about 4% of merchant-payment volumes but roughly 67% of their value, according to brokerage firm Jefferies.

That could generate a sizeable new revenue stream - up to a billion dollars, by one estimate - for banks and payment companies while leaving the everyday smaller payment to the neighbourhood grocer effectively unchanged.